Heating Up

If all goes as per the Centre's ambitious plans, India might witness the addition of 100,000 MW of solar energy in five years, primarily due to the development of ultra mega power projects.

If the recent pronouncements of the government are anything to go by, it looks like the next big hope for the government will be ultra mega solar projects. Earlier, under the National Solar Mission, India had initially planned to achieve an installed solar power capacity of 22 GW by 2022. Now it looks like this target will be firmly revised upwards, and several ultra mega solar power projects with capacity of up to 4,000 MW will be coming up across the country.

"When the National Solar Mission was launched in 2010, even 5 MW projects seemed huge but now even 50 MW projects are being set up routinely. That's the big learning curve we have covered over the last few years. Going forward it is logical that we move to ultra mega solar power plants, says Gyanesh Chaudhary, MD & CEO, Vikram Solar Pvt Ltd. Current indications are that the Ministry of New and Renewable Energy (MNRE) is planning to set up at least four ultra mega solar power plants of 4,000 MW using solar photovoltaic (PV) technology. Tarun Kapoor, Joint Secretary, MNRE, has told the media that the new dispensation's thrust was on large power projects. "The new government is pushing for big capacity addition in solar. Taking a cue from the Budget, the upcoming policies are likely to look at big projects in every possible corner of the country," he has been quoted as saying.

The private sector is also keenly watching the moves that the government is making. "The government has already allocated Rs 1,000 crore for development of ultra large solar power plants and solar parks. Such initiatives definitely spread a positive message on the potential of solar and other renewable energy in the Indian energy ecosystem," says Manoj Gupta, Vice President, Solar, Fortum India. He adds: "India seems to be planning to significantly change the dynamics of its National Solar Mission, as it has recently proposed to add 20 GW through ultra-mega solar power projects of 500 MW capacity or more. We expect these ultra-mega solar parks to bridge the gap of power deficit in this country in order to meet the high power demand."

Minister of State for Renewable Energy Piyush Goyal has said that the government is planning ultra mega solar power projects in Rajasthan, Gujarat, Madhya Pradesh and Jammu & Kashmir. There are plans to set up the country's largest ultra mega solar power plant in Madhya Pradesh's Rewa district. The plant, to produce 700 MW of electricity, would require an investment of Rs 4,000 crore, and will be set up by the State government in collaboration with Power Grid Corporation, MNRE and the Solar Energy Corporation of India.

The challenges

However, this massive thrust on solar energy in general and ultra mega solar projects in particular does come with its own measure of challenges. "There are several issues that need to be addressed to ensure a surge in the solar energy capacity. The industry faces challenges of land acquisition, project financing, ensuring performance ratio of solar plants, availability of skilled manpower for erection and commissioning and finally availability of high quality products," says Peeyush Gupta, Director û Sales and Marketing, UL India. While agreeing that solar parks will provide a huge impetus to solar energy generation, Gupta has another caveat: "The big challenge will be evacuation of power, especially if these power plants are in remote locations and serving the energy demands of those remote villages that still do not have connectivity to the grid. A mixed solar model of ultra mega power plant and distributed, localised solar plants may be needed initially."

There are a few dissenting voices in the industry which are questioning the very rationale behind setting up these mega solar power projects. DT Barki, Director, Photon Solar, says that solar power generation lends itself to the power generation at point of use, which no other power plant offers. He argues that when power is generated at the point of use, the need for long and costly transmission lines is avoided, helping to reduce (the already staggering) Aggregate Technical and Commercial (AT&C) losses in the country. "It is unfortunate that Indian policymakers are not considering this vital aspect while talking about ultra-mega solar parks. Instead, distributed generation should be promoted, which helps in increasing the grid reliability while making it stronger," adds Gupta. Concurs Santosh KM, MD- India, Enerparc Energy Pvt Ltd, "The power of solar energy is the fact that it need not copy the philosophy of conventional power i.e., centralised location of generation and transmission to loads. Solar energy can be generated at or closer to source of consumption. This self generation and consumption market will also remove the burden on grid infrastructure. Also transmission and pilferage losses will reduce too."

One recurrent worry among private entrepreneurs seems to be availability of land for these huge projects, as the acquisition process is perceived to be fraught with delays. "The raw material (sunlight) is free and forever. The only constraint is the availability of land, but we have enough wasteland in our rural and remote areas," says Chaudhary. "Getting vast tracts of land with necessary evacuation is a challenge in India. Many a project gets stalled or delayed for want of land and evacuation and we have seen the success of the solar parks in Gujarat and Rajasthan to remove these hurdles. To that extent ultra mega parks will promote larger solar projects concentrated in certain locations," says Santosh KM.

The government is trying to avert a land acquisition crisis by scouting for land for these mega solar projects along deserts, wastelands, national highways, river banks and canals. Latest reports indicate that the Centre has budgeted Rs 1,00,000 spread over five years for this ultra mega solar drive.

Financial support

"Solar parks will provide a huge impetus to solar energy generation by acting as a flagship demonstration facility to encourage project developers and investors, prompting additional projects of similar nature, triggering economies of scale for cost-reductions, technical improvements and achieving large scale reductions in GHG emissions," says Gupta of UL India. The government is also looking at a single-window clearance agency to promote investment in solar power. Financial institutions have been told to step up their lending to these huge solar projects.

In full swing

It looks like a number of public sector players are going into overdrive to meet the stiff solar generation targets which could be looking at scaling up of India's solar power capacity to 100,000 MW in five years. Though the Union Budget had allocated only Rs 500 crore for ultra mega power projects of more than 4,000 MW, there have been a number of announcement subsequent to the Budget, which have considerably increased the scope of the nation's solar thrust.

One of the biggest public sector projects is coming up at Rajasthan, piloted by a consortium of six undertakings including power sector behemoths like Bharat Heavy Electricals Limited (BHEL) and Power Grid Corporation of India Limited. A special purpose vehicle (SPV) in shape of a joint venture would be set up for the project. Andhra Pradesh, Telangana, Gujarat and Madhya Pradesh are also on the solar radar. MNRE plans to set up 25 solar parks, each with a capacity of 500 to 1000 MW. These solar parks will be put in place in five years, says the government, and the solar projects may then come up as per demand and interest shown by developers. These solar parks will be developed in collaboration with the State governments. The implementation agency would be Solar Energy Corporation of India (SECI) on behalf of the Centre and SECI will handle funds to be made available under the scheme. As Manoj Gupta concludes, "We expect ultra mega solar parks to bridge the gap of power deficit in this country in order to meet the high power demand. On the backdrop of the government's aggressive focus to promote renewable energy, the objective is to scale up demand through alternate energy, thus reducing the nation's dependency on imported coal." Agrees Gupta from UL, "Solar parks will enable India to bring in significant investment from project developers, meet its Renewable Purchase Obligation (RPO) mandates and provide employment opportunities to the local population. It will also help in reducing the carbon footprint by avoiding emissions equivalent to the solar park's installed capacity."

In the meanwhile, the installation of a 400 MW solar project in the US is a unique case in point on a project well-executed amid various impediments. That said, for a developing economy like India, the arena is ready and pace is heating up. India might be at the threshold of an energy revolution, but a modest and consistent approach could be the recommended way forward.

Do we need Ultra Mega Solar Power Plants?

Since ultra mega solar plants will require Rs 12,000 crore of investment (4,000 MW), it is unlikely that the government will soon invest as it is yet to form a joint venture company with equity from BHEL, Solar Energy Corporation of India and Power Grid Corporation.

Secondly, government is planning to bid out the projects on engineering, procurement and construction mode. Now, to construct a 500 MW project, the total cost will be Rs 3,000 crore. And, working capital requirement for EPC player will be in the range of Rs 1,200-1,800 crore.

Although India has a number of EPC players in this segment, very few have the ability and capacity to undertake such projects with requirement of huge working capital.

Meanwhile, cost incurred for the setting up of these projects does not include the cost for transmission and distribution infrastructure. It means, for power evacuation another Rs 45-50 lakh is required to invest in the evacuation bay.